Tax Changes

New Canada Training Credit

If you are employed and taking part in continuing education, you are eligible to accumulate up to $250 annually as Canada training credit, to a maximum of $5,000 in a lifetime. You can claim this credit on your income tax return to reduce your tax owing. If the credit is more than your tax owing, you will get a refund for the difference.

New Home Office Expense

There is a new option to claim home office expenses during COVID. Where the employee qualifies, they can do a detailed calculation or they can use a temporary flat rate method. If they use the flat rate method, then no T2200 is needed. Under the flat rate method, the individual can claim $2 per day for each day worked at home up to a maximum of $400 (i.e. 200 days). However, if they do a detailed calculation, they will have to obtain a regular T2200 form or a shortened pandemic version of the form (Form T2200S) from their employer.

New Journalism Credit

Starting in 2020, individuals can claim a new non-refundable tax credit of up to $500 for qualified digital subscriptions. You must have paid the amounts to a qualified Canadian journalism organization (QCJO) that does not hold a license to broadcast, for a digital news subscription to content that is primarily original news.

New Charitable Journalist Organizations

Also in 2020, individuals can claim the donation tax credit for donations to qualifying journalism organizations.

COVID Benefits are Taxable

If you received Canada Emergency Response Benefit (CERB)Canada Emergency Student Benefit (CESB)Canada Recovery Benefit (CRB)Canada Recovery Sickness Benefit (CRSB), or Canada Recovery Caregiving Benefit (CRCB) payments, these are considered taxable income. You will need to file, and enter the total amount you received on your return. For any such payments, you will receive a T4A (for benefits issued by the CRA) and/or a T4E (for benefits issued by Service Canada) tax slip. The CRA did not withhold tax at source from these payments.

Tuition slip

Starting in 2020, educational institutions will be required to file T2202, and it can be imported from online.

New RRSP Home Buyer Increase

The maximum amount you can withdraw from your RRSP under the home buyers plan has been increased to $35,000.

Online CRA Processing Time Checker

2019 Tax Year Changes

Minimum Wage Increase

Link

As of October 1, 2020 the minimum wage amounts will increase in Ontario

  • General Minimum Wage – $14.35 per hour
  • Student Minimum Wage – $13.40 per hour
If a change to the minimum wage rate comes into effect partway through an employee’s pay period, the pay period will be treated as if it were two separate pay periods and the employee will be entitled to at least the minimum wage that applies in each of those periods.

Working Income Tax Benefit Renamed and Enhanced

The Working Income Tax Benefit is a refundable tax credit that helps give tax relief to low-income individuals and families to encourage them to participate in the workforce. The Working Income Tax Benefit is being renamed the Canada Workers Benefit. But that’s not all. It will be enhanced beginning in 2019 and indexed (increased with inflation) thereafter. (Similar enhancements will be applied to the Canada Workers Benefit disability supplement.)

Under the Working Income Tax Benefit in 2018, single individuals without children were eligible for a maximum benefit of $1,059, while families were eligible for a maximum benefit of $1,922. Those maximum amounts are being increased under the Canada Workers Benefit in 2019 to $1,355 for individuals and $2,335 for families, respectively.

To make your tax filing life easier, the CRA will automatically determine if you’re eligible to receive the Canada Workers Benefit and assess your tax return as if you’ve already claimed it, even if you hadn’t on filing. If you’re an eligible couple making the claim, the CRA will designate the partner who is to receive the benefit.

Claiming Service Animals as a Medical Expense

The medical expense tax credit is being expanded. If you’re filing a tax return for someone who requires an animal specially trained to perform tasks to help them cope with an impairment, then you’ll be able to claim it as a medical expense (if it was incurred after 2017). For example, you could claim the expense for a dog trained to help an individual with post-traumatic stress disorder, along with associated expenses like the food and cage for the animal.

Registered Disability Savings Plan Holders

The Registered Disability Savings Plan (RDSP) is a government program intended to assist people with disabilities save for the future. If the disabled beneficiary lacks the capacity to enter into a contract, a qualifying person (e.g. a family member) can be designated to administer the RDSP. However, this administrator must be the disabled beneficiary’s legal representative, which may pose a problem as the appointment of a legal representative can take quite a while.

The good news is that a temporary federal measure allows an immediate family member to be the planholder of the disabled person’s RDSP, even if they aren’t yet designated as the person’s legal representative. This measure has now been extended by five years and lasts until the end of 2023. Furthermore, if you’re a qualifying family member who became a planholder before the end of 2023, you can remain the planholder after 2023.

New Limited Program for Tax Avoidance

Changes have been made to the Voluntary Disclosure Program (VDP). If you’re unfamiliar with the VDP, it’s a program to encourage Canadians who may not have been completely honest about their tax situation in the past to come forward. If your application to the VDP is accepted, you’ll be required to pay the taxes you owe, plus interest (partially or fully). However, you may be eligible for relief from prosecution or penalties that you’d normally face.

The changes that came into effect March 1, 2018 apply to taxpayers who purposely avoided their tax obligations. If that’s you, you’re now able to apply under a new “Limited Program” and face a lesser penalty.

Rates and Limits

As expected, several tax rates and limits are changing for 2019.

  • Federal and provincial income tax brackets are being increased (due to inflation).
  • Employment Insurance (EI) Premiums are being decreased. The EI rate is being reduced from 1.66 percent in 2018 to 1.62 percent in 2019.
  • Maximum pensionable earnings, the amount used to calculate Canada Pension Plan contributions for the year, will increase to $57,400 in 2019, up from $55,900 in 2018. Likewise, the employee and employer contribution rates for 2019 will increase by 5.1 percent from 4.95 percent in 2018.
  • If you’re a recipient of the Canada Child Benefit, then we have some good news: the Benefit will be indexed to inflation going forward. That means you don’t have to worry as much about your purchasing power falling each year.

Tax-Free Savings Account Contribution Limit Increased

Savers rejoice! At long last, the annual contribution limit on the Tax-Free Savings Account (TFSA) has been upped. In 2019, anyone who’s eligible to contribute to the TFSA can contribute up to $6,000 annually, up from $5,500 in 2018.

As the name suggests, your money will grow tax-free inside the TFSA. Also, unlike the Registered Retirement Savings Plan, you won’t have to pay any income tax when you withdraw your money.

Tax Filing Process Simplified for Low Income/Fixed Income

Starting in February 2018, if you’re a low income or fixed income individual whose income remains the same year-to-year, the tax filing process just became easier. You’re now able to call a dedicated automated phone line. (You should have received an invitation letter with full instructions if you’re eligible.) After answering a series of short questions and providing some personal information for verification purposes, you can file your tax return over the phone. It doesn’t get any simpler than that!

Work from Home Expense

Employees who worked from home more than 50% of the workday over a period of a least four consecutive weeks in 2020 due to COVID-19 will now be eligible to claim a home office expenses deduction for 2020. The use of a shorter qualifying period will ensure that more employees can claim the deduction than would otherwise have been possible under longstanding practice.

A new temporary flat rate method will allow eligible employees to claim a deduction of $2 for each day they worked at home in that period, plus any other days they worked from home in 2020 due to COVID-19 up to a maximum of $400. More information will be forthcoming on the Canada Revenue website for form T777S and T2200S.

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